Ipswich Financial Adviser

If you have climbed the corporate ladder or been successful at running your own business and are earning in excess of £130,000 per year then you need to be fully aware of the restricting tax relief, on pension contributions, that will affect you. 

You need to make sure you have calculated your “Net Relevant Income” correctly to see if you have actually earned above the £130,000.  This includes your income that is chargeable to income tax and pension contributions paid under a net pay arrangement. The calculation does allow you to deduct certain losses and reliefs, relievable pension contributions subject to a maximum deduction of £20,000 and donations that qualify for gift aid. Finally, if a salary sacrifice has been agreed previously, then this may have to be added back into the income figures depending on certain rules.

The calculation is not straight forward and you have to do this for the 2007/2008, 2008/2009 and 2009/2010 tax years. If in any one of those years your income was at or above £130,000 then the new pension tax relief restrictions could have an affect on you.

I would strongly advise that if your income is near or above the relevant figure that you get appropriate financial advice to ensure you make your financial planning as efficient as possible.

Please contact Thompson Financial Consulting and we will be happy to give you the right advice and help you through the pension changes.